The Cost of COVID-19 – Wolves And Finance

Former President Trump declared a national emergency on March 13, 2020. That was the start of the lockdowns from the COVID-19 pandemic. It is now March of 2022. We are two years later. It is a good time to reflect on what has happened. Specifically, we are going to talk about the money. What was the cost of COVID-19? WATCH NOW!

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Sources:

Department of the Treasury: https://datalab.usaspending.gov/americas-finance-guide/spending/categories/

VIDEO SUMMARY

A good place to start is with a central concept that I do not think a lot of people realize. Nothing the government gives you is free. When you think of how the government has responded to COVID-19, people think that a lot of it was free. Free vaccines. Free masks. This might surprise you, but it was not free. What I am going to show you in this video is going to shock you. The cost of COVID-19 was enormous. It is almost unbelievable how much it cost. Not only that, you are paying for it, and you do not even realize it.

Let us look at the numbers. Just last month, the government released some important financial information. This is the FY21 Financial Report for the US Government. It is released by the Department of the Treasury and signed by the Secretary of the Treasury Janet Yellen. In the report, there is a section dedicated to the government’s response to the pandemic.

It starts by listing out the different laws that were passed that contained financial relief. These are six different bills that total $4.8T. (This amount is over two different years, from the start of the pandemic through to Sept 30, 2021). In comparison, the total federal spending for FY21 was $7.5T. COVID-19 spending was a huge percentage of the budget. If we just split 4.8T equally over the two years, it accounts for roughly a third of government spending. This is so staggering, I have to repeat myself. COVID-19 cost so much, it accounts for 1/3 of all Federal spending.

This sounds unbelievable, but let me show you the breakdown. This is a chart showing the breakdown of spending categories for FY21. You see all the normal categories like social security and national defense. But what is this? The largest category is called “Income Security.” What does that mean? That is mainly from the stimulus checks that went out to every American. The budget does not normally look like this. This is the cost of COVID-19. People complain that military spending costs so much. Military spending is nothing compared to what we spent on COVID-19.

We can also look at these categories over the last five years. You can see that spending in most categories remains the same over time. But Income Security jumps up at the start of the pandemic and stays high, because the US provided stimulus checks each year.

What else did we spend the money on? Here is a breakdown of what was spent on COVID-19 relief by Department. I am going to describe the top five categories. The largest amount was by the Department of the Treasury. This was for the stimulus payments, but also for tax credits and funds the Federal government sent directly to the states for local efforts. The next amount was for the Small Business Administration. This was largely for PPP loans for businesses so they could keep paying their employees during shutdowns. Next was Department of Labor. This amount covered unemployment payments for people who lost their jobs during the pandemic. Next is Health and Human Services. This is for purchasing the vaccines, testing, masks, and other supplies.

The next is Department of Education. This is the suspension of student loan payments. This is the biggest disconnect for most people. The government paused all federal student loans, so no one has been paying them for the last two years. However, those loans are owned by a bank somewhere, and the banks are still going to want to get paid. So as long as the government keeps pausing student loans, a huge amount of the budget is for the government to keep making your loan payments. A lot of people think the government can just forgive the loans and the loans go away. But it does not work like that. Someone still has to pay the bank, and right now the Federal government is paying, and most people do not realize it.

So how are we paying for all of these things? The government issued enormous amounts of debt. We essentially put it all on our credit card. We could have paid for it a lot of different ways. We could have temporarily raised taxes on the rich, and then the whole thing would have been paid for. But that is not what happened. It was paid for with new debt.

This means inflation. The Federal Reserve printed money out of thin air. All the new money in the system means prices for everything goes up. We have all experienced the pain as we watch prices skyrocket. What you need to understand is that inflation is a tax. When you are paying more for your groceries, you are paying the tax for the COVID-19 relief. And what is the saddest part of this situation, is that poor people are who inflation hurts the most. Somehow, rich people got richer during the pandemic, and the rest of us normal people have to pay for the relief.

I have to come back to the concept that started this video. Nothing the government gives you is free. This is what people need to understand. The vaccines were not free. The masks were not free. The tests were not free. The stimulus checks were not free. The pause in student loan payments were not free. None of it was free. You are paying for it. If there was a tax on rich people for the COVID-19 relief bills, that could have paid for it. But there was not a tax on rich people.

I remember when everyone started getting their stimulus checks. People were so happy. People were claiming this was evidence that Universal Basic Income was a good idea. They said, “Let’s keep having the government send us checks!” This is all before inflation kicked in. This is what happens. You are paying for your own stimulus checks. With the amount that prices have increased, it has wiped out any money you received from those checks. It is like you didn’t receive anything.

Given everything we know now, we have to ask ourselves, was it worth it? We spent an enormous amount of money. We basically went to the drug companies and paid for their best recommendation on how to respond to the crisis. But were there any other ways we could have responded to COVID-19 that could have been cheaper? Is the inflation tax you are paying worth it for what we got?

One thing that comes to my mind is basic nutrition. We have heard very little about using basic healthy eating and exercise as a way to prevent getting sick. Why isn’t the President getting on TV and telling everyone to do pushups? The data even shows that healthier people were less affected by COVID-19. But the government almost exclusively focused on vaccines. In contrast, efforts around basic nutrition are things that cost very little money and have a huge positive impact on people’s lives. Why was basic nutrition ignored?

There are some key takeaways here.

The COVID-19 response cost an enormous amount of money. Roughly 1/3 of government spending.
The increase in spending has largely been funded by issuing new debt.
Inflation has disproportionately hurt the poor, while the rich have gotten richer.
Both Republicans and Democrats are to blame. Excessive spending occurred during both the Trump and Biden administrations.
Alternative treatments were ignored that could have been significantly cheaper.
If we do not change financial policy dramatically, the current US course will lead to financial disaster.

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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.

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